' MUHAMMAD KHALID MEHMOOD KHAN, J.---Through this single order I propose to decide Writ Petitions Nos.6003 of 2010 and 6004 of 2010 as the same question of law is involved in these two petitions.
2. The petitioners claim that they are one of the Directors and Chief Executive of Mr. Denim (Pvt.) Ltd.
And Messrs Angro Textile Ltd., the leading business houses of Pakistan which have earned a huge quantum of foreign exchange for the country. The said companies had availed financial facilities from respondent No,3 (Hereinafter referred to as Banks) and there is a bona fide dispute with reference to the financial obligations inter se the petitioner and respondent-Banks. Banks have referred a dispute to a court of competent jurisdiction which is pending disposal. For meeting their business requirements the petitioners have to travel abroad frequently. On March 3, 2010 the petitioner received a letter from respondent No,1 informing that their names have been placed in Exit Control List (E.C.L). Letter shows that no reason has been given while passing the impugned order. The petitioners when inquired from respondent No,1, it transpired that Banks through respondent No,2 have succeeded to place the name of the petitioner on E.C.L. The petitioner prayed for setting aside the said order being illegal and without any lawful authority and against their fundamental rights.
3. Notices were issued to the respondents who submitted their parawise comments.
4. Respondent No,1 in its parawise comments has submitted that the names of the petitioners and others were placed on E.C.L on 3rd March, 2010 on the recommendation of Finance Division being loan defaulter of Rs,305.648 Million of Bank of Punjab. Respondent No,1 further asserted that under section 2(1) of Exit from Pakistan (Control) Ordinance, 1981, the Federal Government may by order, prohibit any person or class of persons from proceeding from Pakistan to a destination outside Pakistan, notwithstanding the fact that such person is in possession of valid travel document.
5. Respondent No,2 in parawise comments has admitted that they have forwarded the name of the petitioner to Federal Government on the request of Banks for placement of the name of petitioner on Exit Control List due to petitioner's ' default in discharge of their financial obligations towards Banks.
6, Learned counsel for Banks adopted the arguments of learned counsel for respondents Nos.1 and 2 and adds that petitioner is wilful defaulter and have violated the terms of finance agreement and as such their names were rightly placed on E.C.L.
7. Learned counsel for the petitioner submits that to travel abroad is a fundamental right of petitioner. The petitioners are renowned businessmen and it is the requirement of their business that they have to travel frequently abroad. Further submits that action of respondent No,1 is without providing an opportunity of hearing and as such the same is liable to be set aside. He submits that dispute between the petitioners and Banks is still pending disposal before a competent Court of law and as such till the final adjudication of the dispute, the petitioners could not be termed as defaulter. On mere allegation of default the petitioner names could not be placed on E.C.L. Further submits that subordinate legislation by respondent No,2 is colourful legislation and is against the fundamental right of petitioner and as such the impugned order is without any lawful authority and that notifications, circulars and any instructions issued by respondent No,2 are liable to be set aside being ultra vires to the Constitution.
8. Mr. Muhammad Nadeem Kashmiri learned Deputy Attorney-General, submits that Banks default per se constitute Public interest as per section 2 of the Exit from Pakistan (Control) Ordinance, 1981 (Ordinance XLVI) of 1981, (Hereinafter referred as Ordinance). Further submits that public interest depends on the subjective evaluation and satisfaction of the Federal Government and is not therefore justiciable. Submits that a remedy of review is available to the petitioner and as such without availing the said remedy the present petition is not maintainable. He adds that placing on E.C.L. Of any person is the prerogative of Federal Government in terms of policies and guidelines laid down for due performance of the statute. Further submits that petitioners may avail a facility to travel abroad subject to orders by this Court on furnishing security to the satisfaction of the Court.
9. Learned counsel for respondent No,2 submits that State Bank of Pakistan is the controlling Bank of all scheduled Banks and is monitoring the business of Banks in Pakistan and overseas branches of Pakistani Banks and to safeguard the interest of depositor, the State Bank of Pakistan has the powers to frame laws in terms of Section 25 of the Banking Companies Ordinance 1962. The State Bank has made a criterion for placing the name of defaulters on E.C.L and issued Circular/Guidelines No, BSD(RU-51) / 47/ECL/ 17913/ 2001 dated 7-12-2001 which provides that the names of defaulters ofRs,100 million and above be placed on E.C.L. In respect of whom Banks have reasonable grounds to conclude that the placement of their names on E.C.L. Will facilitate the recovery of Bank dues and that such persons are considered by them as potential absconders.
Learned counsel for respondent No,2 supports the impugned order.
10. Heard. Record perused with the assistance of learned counsel of the parties.
11.
11. To do business is the inalienable right of every citizen of Pakistan. The transaction between the Bank and the customer is a civil transaction. The Banks lend money against acceptable securities to its satisfaction, to its customers/borrowers on agreed terms. After securing their interest the Banks disbursed the loan finance/Banking facilities. Business transaction between the customer and the Banks is regulated by the respective agreement between the parties. Banks are doing commercial business and to lend money is their business requirement and is the part of their licence to act as a Bank. In case the Banks fail to lend money, the Banking business will flop as the Banks accepts the deposit from its customers on the assurance that agreed profit will be given to them at agreed rate for agreed period. It means that customers and the Banks are the necessity of each other. The customer require funds for its business and the bank needs the customer for lending money and earning profit, meaning thereby both the parties enter into an agreement for lawful purpose. For settling the dispute between the customer and the Bank, the respective laws are in field. The Banks and customers before the year, 1979 were governed under a general law but in 1979, the Banking Companies (Recovery of Loans) Ordinance 1979 was promulgated and all disputes between the customer and Banks were made triable exclusively under the jurisdiction of said Ordinance. The said Ordinance was replaced by Banking Tribunal Ordinance, 1984 when the Islamic mode of banking was introduced in Pakistan. The Banking Tribunal Ordinance, 1984 was substituted with Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997. The said Act of 1997 was finally replaced by the Banking Companies Ordinance (Recovery of Finances) Ordinance 2001. All these Acts and Ordinances cover all the disputes between the customer and Bank both civil and criminal. In addition to the above said Ordinances and Acts another Ordinance for adjudicating the criminal offences pertaining to banks, the law Offences in Respect of Banks (Special Courts) Ordinance, 1984was promulgated which is still in force. The perusal of above said laws will show that legislatures have enacted special laws for Banks keeping in mind that relations between the customers and Banks need special attention as the good relations between the Banks and its customers are essential for the country's economy. The special feature of the above said laws is that all criminal offences under the Banking laws are compoundable and bailable except under Ordinance (Offences in Respect of Banks, (Special Courts) Ordinance 1984) .
12. The finance allowed by the Bank to its customer is against an acceptable security and the person of the customer does not matter except where there is allegation of criminal offence. The law framed for resolution of the disputes between these two parties provides the resolution of each and every dispute. The special courts are taking care of all disputes between the customer and banks and as such in this background it has to be seen whether the placement of the customer of Bank on Exit Control list who allegedly committed default in performance of financial obligations is justified and legal.
13. To travel abroad is the fundamental right of every citizen of Pakistan even if he is not a businessm an. Likewise to do the business of his own choice is also a fundamental right of citizen of Pakistan guaranteed by Constitution of Islamic Republic of Pakistan. For appreciating the true intent of dispute section 2 of Exit from Pakistan (Control) Ordinance, 1981 is reproduced as under:- Power to prohibit exit from Pakistan
(1) The Federal Government may, by order, prohibit any person or class of persons from preceding from Pakistan to a destination outside Pakistan, notwithstanding the fact that such person is in possession of valid travel documents.
(2) Before making an order under subsection (1), it shall not be necessary to afford an opportunity of showing cause against the order.
(3) If, while making an order under subsection (1) it appears to the Federal Government that it will not be public interest to specify the grounds on which the order is proposed to be made, it shall not be necessary for the Federal Government to specify such grounds."
14. The important word which empowers the Federal Government not to specify the grounds for bringing the said law into action against citizen is a "Public interest". The word "public interest" has to be seen in its true letter and spirit. The word "public interest' shows that Federal Government can prohibit the person from travelling outside the Pakistan only in the "public interest" the fact of the matter is that in a matter of a certain action of person in the "public interest", the authority/Federal Government while taking any action has to show the grounds/reasons for the action, especially when the right of travelling abroad of the citizen is guaranteed by Constitution of Pakistan and is a fundamental right as enshrined in Articles 4 and 9 of the Constitution. The authority to decide the action against the person has to keep in mind the public interest i,e, the interest of country (a common interest) and not the interest of individual and in case of challenge the court is the only authority in law to decide the action "legal or illegal". The Federal Government or any other person on his behalf has to convince the court with convincing evidence that it is in the interest of State that travelling abroad of the person is against the interest of State and is in public interest. The Bank's claim has to be settled under a lawful agreement between the parties. In the circumstances of the present case, the public interest has to be seen with reference to the alleged default on the part of the customer and Bank which is also a juristic person. It is an established principle of law that no one can be termed as defaulter unless declared by the competent court of law and as such the laws framed for determination of the action of the customer as well as Bank have to be seen and considered before taking any action under the Ordinance. It is an admitted fact that courts established under the relevant law are the sole authority to adjudicate the status of defaulter. The perusal of the law relating to banks and customers will show that courts have been established with reference to all the disputes between the Banks and its customers, unless court after recording evidence adjudged that the customer is a defaulter, the status of customer will not be deemed to be defaulter. A person cannot be declared as defaulter on an allegation of one party who is claiming its rights under the legal agreement. After insertion of Article 10-A in the Constitution of Islamic Republic of Pakistan vide 18th Amendment it has been made obligatory on the functionaries of the State that every citizen has the right of fair trial. The right of fair trial is available to all the citizens of Pakistan for determination of their civil rights and obligations or in any criminal charge against them. The Banks allow financial facilities to its customers against the acceptable security and after its satisfaction that Bank is fully secured against any possible risk of loss or repayment of finance the Banks disburse loan/finance to its customers, meaning thereby repayment of Banks finance and its financial risk is fully covered. The transaction between the customer and the Bank is a business transaction and the risk of loss is present in the transaction, so the Banks takes all cautions and care before disbursing loans and in case the loan is not repaid according to the agreement, the matter has to be referred to the court for recovery. The Bank alone has no authority to give verdict against its customer that he is a defaulter. The Bank is not the judge of its own actions. If it is assumed that the Bank is a judge of its own action, in that case there will be no need for any court or any law. For example the customer if has a valid claim against the bank and the bank is an accounting party, but the customer without the verdict of court has no power to declare the bank as defaulter. But the Bank for denying, the claim of customer will use the said tool and before passing any verdict against him the Bank will just write a letter to State Bank of Pakistan for placing the name of customer on E.C.L., the State Bank will pass on the said decision of Bank to Federal Government and Federal Government will place the name of customer on E.C.L.
Without ascertaining the real fact but the customer's business will be ruined. Further if a customer opens a letter of credit for the import of certain items from abroad or within country and the Bank negotiates the documents in violation of the terms and conditions of the letter of credit, can the customer could declare the Bank as defaulter? The answer is no, the customer has to go to the Court for the said declaration. Hence, the argument of learned counsel for respondent No,2 if is accepted that it is the prerogative of Bank to decide who is a defaulter and who is not a defaulter, then the customer will be remediless. In case, if the customer files a suit of more than 100 Million against the Bank whether the State Bank will refer the case of the Directors or share-holders of the Bank to place their names on E.C.L., the answer is again no. The State Bank of Pakistan has no authority in law to frame any law against the rights of the customer. No doubt State Bank of Pakistan is the controlling authority of the Banks but it cannot frame any law which is in violation of the fundamental rights of the customer. The State Bank has no powers to issue any directions/instructions to the banks to declare the customer defaulter against whom the claim of bank is Rs,100,00 Million or more without referring the dispute to Court. There is another angle of the said proposition, if the customer dies, whether the Bank loan will not be recoverable? Whether the Bank will relinquish all its claim against the legal heirs of deceased customer? Hence, the person of customer is not a necessary party in the transaction of finance. It is the securities which the Bank takes from the customers for repayment of its financial matters unless there is charge of criminal offence against the person of a customer and even if there is a criminal charge against the customer of the Bank, the law is there to redress the grievance of the Bank. The Bank can approach the court for the redressal of its grievance, the courts established under the law are enjoying all powers to pass any order in aid of justice. Hence the direction of State Bank of Pakistan to Banks .One of the party to contract, to declare the customer defaulter, and put his name on E.C.L. Is discriminatory. On a simple request of the lending Bank not backed by any court order the State Bank of Pakistan has no authority to forward the said request to the Federal Government for placing the name of customer on E.C.L. Likewise Federal Government has also to apply its own mind before taking any action against the customer of the Bank for placing his name on E.C.L. In these circumstances Guidelines and Circulars issued by the State Bank of Pakistan specially Circulars Nos.BSD (RU-51) /47/ECL/ 17913/2001 dated 7-12-2001 and BSD (RU- 51)/ECL/47/20162/2000 dated 5-12-2000 are subject to the orders of competent court of law.
Perusal of above two notifications shows that the State Bank of Pakistan has wrongly authorized the Banks to decide themselves that customer is a defaulter, the relevant portion of Circular No,BSD (RU-51)/47/ECL/17913/2001 dated 7-12-2001 is reproduced as under:- 46 1 The Bank shall propose the names of only such defaulters of Rs,100 million and above for placement on the E.C.L., in respect of whom the bank has reasonable grounds to conclude that placement of their names on the E.C.L. Will facilitate in the recovery of bank dues, and that such persons are considered by them as potential absconders.
(Sd.)
S. Zulfiqar Hussain Wasti Joint Director."
15. The bare perusal of the circular shows that State Bank of Pakistan while issuing the above said circular has failed to consider the rights of the customer and has declared the customer as defaulter without hearing him, the words used will facilitate in the recovery of Bank dues, and that such persons are considered by them as potential absconders" (Underline is mine) shows the intention of the framer of the instructions/circular that in his assessment the agreement between the customer and bank has no legal value and that bank is always right, which is not the intention of any law. It seems that due to long dictatorial regime in the country, the framer of the said circular is still moving in that orbit and is not realizing that Pakistan is democratic country where the Constitution is supreme and everyone has to act in accordance with law.
16. The framer of the above notifications has not considered that bank can also commit illegality.
For redressing, the grievance of customer against the Bank of more than Rs,100 Million, the State Bank of Pakistan has not framed any law nor has issued any circular for placing the name of Bank shareholders/Directors/Chief Executive for placing their names on E.C.L. In my firm opinion unless the matter is decided by the competent court of law how the State Bank can treat the customer as a defaulter, it is the Court of law who alone can adjudge any person defaulter. It is an established principle of law that even Parliament could not frame any law against the fundamental rights of the citizen of Pakistan what to say the State Bank of Pakistan. Hence, the circulars and notifications issued by the State Bank of Pakistan referred to above or any circular with reference to declaration of defaulter of customer of bank without any adjudication by a competent Court of law is a colourful legislation and is bad in law.
17. The Federal Government is duty bound under the law that before passing any adverse order against a customer of bank to apply his independent .Mind. Parawise comments submitted by the Federation shows that they only acted on the instructions of State Bank of Pakistan and has not applied their independent mind. The Federal Government under the. Ordinance is bound to assess the material available before him that too in the public interest before placing the name of customer of a Bank on E.C.L. In case the lender Bank or the State Bank of Pakistan think that it is necessary, that the person of customer should 'be restrained from travelling abroad, they have to approach the Court where the matter is pending disposal for obtaining appropriate orders. The courts will act in accordance with law and will pass judicial order after hearing the parties according to law. The lender Bank or the State Bank of Pakistan has no authority to send the name of any customer against whom the bank has any allegation of fraud without adjudication by the Court, to Federal Government to place his name on E.C.L.
18. The argument of learned. Deputy Attorney-General that for placing the name of any person on E.C.L. Is on the basis of subjective evaluation or assessment of Federal Government may be relevant where the allegation against the person is of anti-State activity but is not applicable with reference to dispute between customer and bank with reference to a lawful agreement. As far as the question of review of order passed by respondent No,1 is concerned, the impugned order shows that it was passed on the letter of State Bank of Pakistan and the lender Bank without any application of mind by respondent No,1, the remedy of review become illusory and as such is not the proper remedy.
19. In view of the above in my humble opinion the circulars referred to above and order dated 3-3- 2010 is against the fundamental rights of the petitioner and are hereby declared without lawful authority and of no legal effect. The petition is allowed.